Ghana’s rising debt; no cause for alarm yet – Economist

Ghana’s rising debt; no cause for alarm yet – Economist
Source: Ghana| JoyBusiness | JAD
Date: 12-07-2018 Time: 06:07:17:pm

Economist Prof. Peter Quartey has said there is no cause for alarm at the moment on Ghana’s rising debt stock.

According to a provisional data from the Bank of Ghana, the country’s total debt stock has reached GH¢154 billion May ending.

The data shows that stock of debts has gone up by Gh¢9 billion in three months from February 2018. 

The Bank of Ghana in February this year put the public debt at GH¢145 billion based on its summary of Economic and financial data.

But in an exclusive interview, Prof. Quartey said, “at the moment I don’t think there is much cause for concern given that we have moved from 73% to about 63.4%."

He added, “We are not far away from the dreaded 70% mark but I think we should be very cautious as well not to accumulate debt that will add to our GDP.”

According to the fiscal data seen by JoyBusiness, the provisional debt stock of GH¢154 billion would translate into 63.7, per cent of GDP at the end of May 2018 compared to 66.8 per cent for the same period in May 2017.  

Borrowings for the half year

From the data, it is clear that there has been some reduction in terms of the Debt-to-GDP. 

For instance, as at the end of December 2017, the Debt-to-GDP was 69.8 per cent.  This should mean the country is making some progress in moving away from the dreaded 70 per cent mark, which could result in the country being tagged as highly “Debt distress Country” or having challenges in paying our debt back on time. 

However, some economists have also argued that the country is witnessing some improvement in the Debt-to-GDP ratio because the economy is expanding.

According to government’s issuance calendar for the first half of this year, it borrowed about ¢22.4 billion through bonds and Treasury bills.

However, only ¢4.6 billion can be classified as fresh borrowings which were used to meet the government’s financing needs.

The remaining ¢17.8 billion was used to finance debts that were maturing or “rollovers”. 

The calendar showed that it took ¢11.3 billion in the second half of this year and ¢11.1 billion in the second quarter of this year.

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